Business Guidance/Tips

 

The theme in all negotiations this year should be in holding back rather than as a 'bull at the gate'.

We should all remember the bridges that one must cross back over. 

One should be concerned above all the damage that may be caused in some negotiations and whether these could be irreparable.

For those that are unsure obtaining a second opinion may be valuable or even bouncing your thoughts off a friend/colleague.

(09/04/2020-Giovedi/Thursday)

Federal Government Covid-19 Stimulus Packages:

 

Joseph has concentrated on explaining the parts of the Stimulus package in which JPA and it’s clients are directly affected.

 

Tranche 1 announced 12/03/2020. = $17.6 Billion

 

            Personal Incomes of Centre Link Rec.; A one off payment of $750 commencing 31/03/2020 to eligible Centre Link recipients,                         including pensioners.

 

            Small Business Apprentice and Trainee support; So that small businesses can retain apprentices and trainees by reimbursing 50                 of their wage for the 9 month period January 1 to 30 September 2020.

Both the above are welcome measures.

 

 

            Small Business Boosting Cash Flow BAS/IAS Credits; of up to $25,000.00 with a minimum of $2000.00.  As of 14 days from the 28th             April. 2020.  It will be based on the W2 amount reported at the time of BAS/IAS lodgement.

 

Cash is King. 

And this is not! 

This incentive will not deliver cash but credits only to the debit accounts of businesses who owe tax debt.

In March 2019, at a ATO forum held in Rockingham, it was declared that the Peel Region Area debt was approx.. $400 million.

Of this 80% was small business debt.  It was also acknowledged that worse areas in Australia exist. 

So this incentive will do nothing for the businesses operating in the lower socio-economic areas of Australia. 

Shame on the Federal Government for a failed and mis-directed stimulus.  It will aid those businesses who are well-off and do not owe debt to the ATO.  These already  well-off businesses will be splashing in cash after April 28. 

No thanks to the Architects, who instead of consulting and listening to the Accountants and Tax Agents at the coal-face have relied on the advice of their bureaucrats. Whom in the “heat of battle’, blame “Cyber Attacks”!!!!

              Small Business Instant Asset Write-off; businesses with a turnover of $500 million or less will be able to immediately write-off                   individual assets, new or second-hand up to the cost of $150,000.00 each per asset.  Purchased between 13/03/2020 and installed               ready for use up to 30/06/2020. Applies to both Div. 40 (Plant & Equip.) and Div. 43 (Residential & Commercial Buildings).

 

 

This stimulus measure is socially irresponsible at a time when businesses need their cash reserves to pay bank loans and rent and wages. 

I have already taken the most enquiries on this measure and having to ask my clients to re-consider the priority areas of their business rather than go on a “Cash Splash”.

             Small Business Investment Incentive; in addition to the above will allow a further 50% accelerated rate of depreciation on top                of the existing rate, on new assets purchased between 13/03/2020 and installed before 30/06/2021.  Applies to Div. 40 (Plant &                      Equip.) only.

 

Tranche 2 announced 22/03/2020. = $66 Billion

 

             Personal Incomes of Job Seekers; an extension to the existing Job Seeker payment (previously New Start) of $550 corona virus                        suppl. per f/night for the next 6 months.  Promised reductions in means testing and waiting periods.

             Pensioners will instead receive a further $750 top up as per Tranche 1 but in mid July 2020.

 

It will long be debated whether Job Seekers require this ‘corona virus supplement’.  The only grounds upon which this may be justified is the recent cost increase in all staples due to panic buying causing empty shelves.

 

 

             Administrative Relief for Work from Home arrangements; A new $0.80/ hr rate to cover home running expenses has been                          declared for use between March and June 2020.  Or use the existing rules which may be more beneficial.  But will require the keeping              of bills paid, not reimbursed to support substantiation.

Use the method which yields the largest expense claim.

This is welcome relief.

 

             Tax free Superannuation Withdrawal; 2 allowed of $10,000 each in the years ending 2020 and 2021 financial years.  There will                      be no tax deducted from source, allowing superannuants to enjoy the full amount.  One or more exit requm. will need to be satisfied.

Remember to seek financial and taxation advice as your super nest egg may have taken a hammering to the balance of one third it’s value since the start of the pandemic. 

Esp. if withdrawing from a non-cash, illiquid fund, where asset disposals may be necessary.

 

             Small Business Boosting Cash Flow BAS/IAS Credits (an extension of Tranche 1 above); The same concerns apply and are real                    which I repeat below.  The $2,000 minimum of Tr. 1 has been increased to $20,000.  The $25,000 maximum of Tr. 2 has been                              increased to $100,000. 

             For most small businesses in the Peel region who lodge Quarterly BAS/IAS’s can expect anywhere between the new minimum and                    maximum over 3 payments to cover the 6 month moratorium.

             Credit dates will be 14 days after the lodgement dates of 28th April, 28th July and 28th October, respectively.

 

I have called this the big flop!!!!

Cash is King. 

And this is not! 

This incentive will not deliver cash but credits only to the debit accounts of businesses who owe tax debt.

In March 2019, at a ATO forum held in Rockingham, it was declared that the Peel Region Area debt was approx..$400 million.

Of this 80% was small business debt.  It was also acknowledged that worse areas in Australia exist. 

So this incentive will do nothing for the businesses operating in the lower socio-economic areas of Australia. 

Shame on the Federal Government for a failed and mis-directed stimulus.  It will aid those businesses who are well-off and do not owe debt to the ATO.  These already  well-off businesses will be splashing in cash after April 28. 

No thanks to the Architects, who instead of consulting and listening to the Accountants and Tax Agents at the coal-face have relied on the advice of their bureaucrats. Whom in the “heat of battle’, blame “Cyber Attacks”!!!!

 

 

 

             Insolvency Relief for Businesses from Creditors; To prevent anxious creditors over the 6 month moratorium, by lifting the                              statutory demand amount from $2,000 to $20,000.  Also the statutory period from normally 21 days up to 6 months.  Granting pesky              lawyers a well deserved rest! 

This is welcome relief as business owners should not be looking over their shoulders in fear of slowing payments to coincide with their income to be decimated by forced Government closures.

 

             Continued Support for Disability Recipients; The Federal Govt. has extended funding to the National Disability Insurance                          Scheme (NDIS) for both participants and providers for a further 24 months.

             A 10% loading has been extended to the price limits of current supports for the 6 month moratorium period.

This is welcome relief for our Elder Abuse clients.

TO BE CONTINUED

(30/03/2020-Lunedi/Monday)

Our client Chameleon Costumes of Port Kennedy, has decided to think outide the box and has introduced a creative and novel way of promoting their products.  Check their social media sites for details.  JPA have decided to introduce "A One Garmet - Fancy Dress Friday's" theme to maintain positive spirit.

Whilst our Salon Owner, with casual employees, decides to stay open, because her business model allows it!  See the employee memorandum that followed:

JP/DFT05

 

26th March 2020

 

All Current Employees

Claremont Quarter Centre

9 Bayview Terrace

CLAREMONT WA 6010.

 

 

Hi Valued Employee,

 

Re: Guiseppina Doria (Josie) T/as Luciano’s Hair Fashions for Men and Matrix Management Pty Ltd

Shop 134 Claremont Quarter

 

CORONA VIRUS (COVD-19)

 

Hello again guys, hope you are keeping well at this time of Health and Economic unease.

As you know we act as Accountants and Agents for Josie and her businesses.

 

Josie has asked to write to you, to confirm the understanding of your employment during this time.

Firstly none of you is forced to work today, apart from you who have, mortgages or rents to pay.  Which makes all of us! including Josie.

This week’s worked wages were affordable, but for how long the salon is allowed to remain open is unknown. 

We have spoken with the CQ Landlord, re the lease and favourable discussions will continue.

There is a lot of conflicting information in the media at the moment as our Government’s both Federal and State grapple with conflicting decisions from their many advisors.

If there is an amasing individual who has all the answers, please raise your hand, as you are in need at the moment.

But now is not the time to take sides or lambast or criticise.  If we are to pull through this, we as individual thinkers must work together.

Most casual workers were the first casualties last week, when our Federal Government declared some industries closed.  Due to the greater risk (on the spread of Covid-19), of staying open, and people’s behaviour of wanting to congregate.

 

You are all casual workers, but Josie values your employ.  So she is doing something different to the norm. 

She will introduce and pay for up to 5 days sick leave, pro-rata depending on how many days you as an individual work in that week.  Josie is doing this off her own back, with no help from either State or Federal Govt. stimulus.

So the Federal Government Pandemic response is in place.  At this stage we know that this in place for 6 months.

 

If you are unsure as to how many sick days you may be entitled to please call Joseph during the following times and he can advise.

 

Monday to Friday 10am to 5pm AND 9pm to Midnight.

At Work, 08 95273070.

Mobile, 0417 964 802.

 

Josie and I will keep you notified of any changes going forward as this is very likely in this Corona Virus world.

Above all we wish you and your families continued health and the ability to work.

 

 Yours sincerely,

 

 Josie and Joseph.

JPA has provided the above cases in good faith so that other business leaders, who may be contemplating closing down, have a second option.

 

 

 

 

 

(23/03/2020-Lunedi/Monday) WINTER IS COMING!

           JOSEPH PATERNITI & ASSOCIATES

                   Policy and Procedure

   Prevention of the Spread COVID 19 (Corona Virus)

 

As of the 1st of April 2020, in order to stem the tide of the current declared Pandemic the following Office Policy and Procedure will be put in place for the betterment of all staff:

POLICY:

  • All Full Time staff will be allocated an additional 5 days of paid sick leave.

  • All Permanent Part Time staff will be allocated an additional 4 days of paid sick leave OR 2 days paid sick leave (pro-rata) depending on the number of days you currently work per fortnight.

  • All Casual staff will be allocated 5 days of paid sick leave.

This is so to encourage staff to stay away from the office at the slightest indication of cold/flu like symptoms.

 

PROCEDURE:

  • JPA will supply a general Zinc and Vit. C, supplement for immune support of staff members. Follow the dosage instructions.

  • JPA will supply a hand sanitiser for staff use.

  • JPA will supply disinfectant wipes for staff use at work stations and phones.

  • The final staff member of an afternoon (usually Joseph, but not exclusively) is charged with administering sprays of Glen 20 Spray Disinfectant (or equivalent) in every room prior to departure.

Through this practice we endeavour to ensure the health, safety and well being of our staff, but also our clients, which we will be in daily contact.  The ultimate aim being the containment and slowing down of the spreading of the virus to vulnerable  members of family and the community.

This policy and procedure is expected to stay in place till the Federal Government declares control of this Pandemic and a return to normality.

As a professional practice in the provision of business services, Joseph envisages that the virus will spike following the Easter break and again in August 2020, at the height of our southern hemisphere winter.

If the virus is not contained by the authorities by the time of mid July 2020 (the start of our busy tax season) then drastic measures will require to be enforced.  This will include:

  • Joseph meeting with clients after 4pm for the purpose of data collection and preliminary tax preparation.

  • Staff that have maintained their health will be required to restrict their hours till 4pm and or similarly change their start time to before 8.30am if they wish to maintain their current hours of work.

  • No staff member other than Joseph will be required to work extra hours.

We request that all staff members acknowledge and understand this policy and procedure directive by signing hereto:

 

(09/03/2020-Lunedi/Monday)

“Confidence of Small Business”

Australia must be at its Creative Best and think outside the box in 2020.

Numerologically, 2020 is a universal path 4 year, as well as being the start of the third decade of the 21 century.

A year of focus, form, foundation and future (refer our JPA Blog).

It will take the continued survival of small businesses to ride the current curve ball thrown at Australian’s firstly by the recent bush fires and now the contagion of corona virus.

In a relatively short period both occurrences have taught mankind repeatedly many things.

The two obvious lessons are:

Firstly appropriate action (re fire fuel loads), cleanliness and sanitation still present as major hurdles.

Secondly logistical reliance on one geographic for most of ‘ones’ business input’s proves problematic.  This problem is multiplied if that same ‘one’ also supplies raw materials to that major geographic.

In February 2018, I wrote (JPA Blog) that our continued reliance on China may cause us to belch for some time yet.  And that India, being the largest democracy in the world, could be a solution for Australian businesses.

China should put it’s “Belt and Road Initiative 2013” on hold for a more practical and attainable “Communal Development and Sanitation Initiative 2020”.  It will need to work hard to regain the trust of the western world from this outbreak.

Given the above, waiting till both State and Federal Budgets in May before any new stimulus is considered, will worsen the impact for Australian businesses. 

For Australia one stimulus package that could be put in place quite easily is a “Cash for National Travel Initiative”, which could encourage travel within Australia only and esp. to fire affected areas.  Examples would be $2000 (for up to 200kms), $4000 (for up to 400kms), and $6000(for over 600kms travelled), individual or family travel incentives.

The 2 Federal ministers and 1 bureaucrat who last year declared they would help small business by reviewing and lessening red tape should ‘walk the talk’.  I won’t mention your names just yet.

Bush fires and Pandemics will continue to disrupt.  How Governments react to contain the fallout will frame our perceptions of them going forward.

As families we should continue to reassure our children and young adults that we in Australia have some of the best scientists, engineers and medical minds in the World, who are currently working on solutions and vaccines.

JPA through our member organisations the IPA and TIA and the ATO, will do our best to continue to assist small businesses and individuals through these times.  It will shape our focus this year with the pouring of foundations to our office extensions on 04/04/2020.

(04/11/2019 Lunedi/Monday) PROJECT INCENTIVES and GOVERNMENT SPENDING

 

Why should we not foster in the ‘burbs a budding young entrepreneur with tomorrows visions of power storage or magnetic propulsion.  We should be able to connect our smart phones to dash mats, sun visors, even hats to recharge them

And why not extend the rapid heating technology from induction magnets of your cook top to propelling tomorrow’s voyage to the stars.

 

Australia should take the lead in downstream processing of Battery storage (Lithium) and Magnets (Neodymium and Praseodymium) with the world demand for Rare Earth Minerals growing daily.

With our rich reserves Australia should not restrict itself to being a supplier only.

The Federal Government overhauled the Research and Development Tax Concessions in 2011 and professional argument suggests that these changes have proved misguided.

The current legislation sits in draft awaiting passage through parliament and applies to income years beginning July 1, 2018.

The old legislation allowed for a cap of $100 million on R&D expenditure for all

entities irrespective of size.  So that if you were a small business with a turnover of

$20 million but had eligible R& D expenses of $15 million.  Then as a business you

 would only pay tax on the remaining $5 million profit. 

This concession was simple and easy to understand even for small businesses.

Whilst this bill remains in draft the Interim Special Transitional Rules apply:

The existing draft Bill introduces a $4 million cap for companies with a turnover

of $20 million or less (being a 1/5th or 20% ceiling)

It is suggested that this turnover is biased against SME’s, Small Business (under 20

employees) and Micro Business (under 5 employees)

The previous expense concession now becomes a tax offset of 38.5% (large business

turnover greater than $20m) and 43.5% (small business turnover less than $20m),

refundable only if turnover is less than $20m.

Also in doing this the “bureaucrats and policy advisers” extended the “Part IVA Anti

-Avoidance” rules to include any “tax benefit” received from R&D Activities.

Ensuring that the might of the ATO will apply “where an R&D entity enters into an arrangement for the dominant purpose of receiving the R&D tax offset”.

The saying that “the proof is in the pudding” is true in this case

As a practice we envisage no uptake in the R&D Incentive at the Micro Business level, whilst this bias remains.  Mr. Paterniti can only remember assisting with this concession twice in his career as a Tax professional and both of these were in the late nineties and IT related.

Sacrificing Research and Development for a balanced budget may have been the flavour of the month back in 2011, but the Federal Government cannot continue to protect its budget surplus whilst national productivity and wages stagnate

This stance also invokes memories of previous leaders and statements made of a Banana Republic

Both Federal and State Governments should refrain from running their budgets on a “for-profit basis” at a time when large infrastructure projects and down-stream processing projects present for the taking.   

The Reserve Bank Governor has repeatedly stated that the recent cuts to official interest rates alone will not be enough to start and drive growth.  And has urged both Government and Business to recommence large scale investment spending back into the economy.  In recent weeks the Governor has also urged the big banks to scale back their (hurdle) rates of interest, so as to be more in line with the official rate.   

 

  

(03/02/2019-Sunday): UK Delegation.  You may remember that this was to be a Post-Brexit Conference.  Delegates have been told to prepare in the same manner, as we await a decision.  Our discussions, ideas and presence will add invaluable outside experience for our UK counterparts.

Initially, Delegates were given the following brief:


Personally led by IPA Group CEO, Prof Andrew Conway and Board Chair, Damien Moore, this delegation will combine site visits and an intensive program.
The program will include:

  • Examination of opportunities Post Brexit.

  • Current state of European economy.

  • Latest views and innovations in SME lending and finance Global risk update and visit to Lloyds of London.

  • The latest accounting technology at Accountex - the largest accounting expo in the UK

  • The most up to date training on anti-money laundering and the impact for Australia

  • Opportunities for Australian small and medium enterprises in the UK.

  • Latest update from International Financial Reporting Standards Foundation-Columbus House, Canary Wharf.

This provides a unique opportunity to meet and interact with the following organisations:

  • HM Treasury.

  • Australian High Commission.

  • Lloyds of London.

  • London School of Economics.

  • Diplomatic missions at European Bank.

  • British Business Bank.

  • International Taxation experts.

There will be the opportunity to network and enjoy iconic landmarks in London and the surrounding countryside.

(20/01/2019-Sunday): Chris, Dr. Karl and I.

My son Chris won a science competition in year 4, (2004) he was about 10 at the time.  He along with 4 others from W.A. primary schools were invited to Optus Sydney for a final competition ahead of the launch of an Optus satellite from French Guiana.  A young girl from country NSW was the final winner and she and a family member won an all-inclusive trip to the Launch.

We all gave our thanks to Optus for giving our children this opportunity, and Chris has photos for future memory.

We all had time to mingle with Dr.Karl, and on the question of "space travel" which has intrigued me since I was young boy.  I asked Dr. Karl

what he thought of magnets, magnetism, and the planetary poles as both a fuel source and navigation aid.  Much like doves and homing pigeons, which we could learn alot from.

In his opinion, Hydrogen was the next fuel source for mankind because of it's abundance in space.  He did mention though that because of it's volatility, safe storage and transport would be a critical issue.

I will expand on this in future writings, as I promised after the world lost Physicist Stephen Hawking in March 2018.  Who researched Black Holes and space/time travel.

The largest particle accelerator, the Large Hadron Collider built near Geneva in Switzerland and completed in 2008, uses electromagnetic fields in a controlled environment to propel charged particles to very high speeds and energies. 

It was announced this last week that $40 billion would be spent to expand this facility, and that Dr. Clancy James from Curtain University in Perth, is involved. 

This is great news!!!!

Pulse Global and Pulse Australasia Shareholders and Directors meeting of Thursday 20th September2018:

See photos of our meeting on the 36th floor of the ‘Gateway Tower’ in Sydney last week.

With the exception of me, there were some very influential people in ‘Australian Business and Capital funding’ present.  My involvement has been encouragement, foresight and intuition.

After six hours we finished with a name change, think of Greek Mythology and the son of Zeus, Apollo.  More for later.

(08/08/2018-Wednesday)

So when the CEO of "Pulse Global" returns to his native city of Rockingham, where do I take him for lunch?  Well you are going to have to wait for my Trip Advisor write up.  But here is a sneak peek of the photo that General Manager, Richard Ingrilli took of us.

 

 

(06/08/2018-Monday)

JPA can now declare this new addition of Pulse Global.  Go have a read for yourself!  This is a very exciting chapter for our organisation, in this 2018, numerology 11, Pro-active year.  As our client Mr. Becsi confirms that his colleague the Forensic Psychologist, and I share one passion in common.  You will have to wait till I meet her in person for the rest.  She is currently on a roadshow in the UK.

(29/12/2017-Friday):

-Our client Mr. Mark S., enjoys riding his Harley D. M/C to work on occasions, reward after many years of saving and was not concerned when we prepared his 2017 taxation return.  But we were alarmed at the resultant payable. 

So we asked him to get his ‘Payment Summary’ verified by his employer.

As in the many prior years he had received comfortable refunds. 

We had noticed that he had 1- changed employers, 2- declared a larger salary sacrificed Superannuation amount and 3- the taxation amount declared looked too low in comparison to his declared gross earnings. 

The latter two points being creations of his new employers pay office.

The client’s next actions or rather inactions were amusing. 

He signed his return for lodgement without a query, the ATO assessment arrived with the payable, then his wife rings asking why her husband has to pay a large amount this year (as wives do).

We asked if her husband could re-attend our offices with his latest ‘pay slip’ for the 2016/17 year.  Where an error and inconsistency was detected between his ‘payslip’ and ‘payment summary’.

We highlighted this error for the client so that he could point this out to his employer.  This type of error can occur in smaller firms and pay offices where there may not be the capacity to double check or verify the originators calculation. 

In this present case, the ‘payslip’ was correct but was misinterpreted when putting together the clients ‘2017 Payment Summary’.

What originally resulted in a $5,275.00 payable for the client, became a $ 1,364.00 refund.  A $6,639.00 turnaround. Once we processed the amended assessment on behalf of the client.

 

-Garth and Ellen’s Gymnasium takeover is finally taking place.  A letter of reference by the Accountant was required to allay any remnant fears, the Business financier was having at the 11th hour. This business settlement should have taken place on Monday the 13th November.  The letter was prepared last Wednesday night whilst on leave, executed and emailed the following morning.  Later that morning the financier, formally approved the loan.

As accountants we have been called upon on many occasions to vouch for our clients, businesses, debt or cash flow forecasts.  Especially when the Financier and the chosen Broker, are not on the same page. 

In this case it was very easy for us as Garth represented the 3rd generation of his family, to have used our continual service.  This is what ‘goodwill’ is all about.  And Goodwill should always be seen as a ‘two way street’. 

It is our opinion that any business after all is as good as it’s last satisfied customer/client.

The takeover of the Bodyapeel Gym, Rockingham in Robinson Rd and it’s transformation into Goliath Fitness, will take place in January sometime, depending on the availability of settlement agents at this time of year.

 

Learning points: The Good, the Bad, and the Ugly that may present on business settlement.

  1. Make sure that the backing or ‘equity’ (normally a Certificate of Title) you are putting up, is actually ‘in your name’.  If not this will delay settlement.  If settlement is delayed, you may lose the business to a competing buyer.  As well as the deposit you have paid.

 

   2. Offers should be made in your ‘birth name or the name of your Legal entity’ if one has been set up.

 

   3. Do not ‘make an offer’ on a business till your Accountant/Consultant can ‘verify the valuation or asking price’.  This can take two forms:

  • Value the price of business Goodwill, Plant and Equipment, and Stock only.  You would expect to pay between $500 to $3000 for businesses valued $200,000 to $500,000, or

  • A full Due-Diligence.  But you have to be prepared to pay more.  Some specialists can charge from $5000 for businesses with a starting price over $500,000.  Because of this it is not worth their while looking at businesses below this value.

 

  4. Never accept a ‘counter offer’ before you have discussed this with your Consultant and Financier first.

 

  5. Never leave your regular occupation until you know you have ‘secured the finance and the business’ you are buying.  Otherwise your  work payout/entitlements may not cover the penalties, of a settlement, that can’t be satisfied, for whatever technicality.

 

  6. Lastly a business is akin to having ‘child’, only much more expensive, initially.  In it’s early years it will require your ‘constant attention’ and may require you to retrain.  This can also involve a cost. If you cannot devote the time do not make an offer!

 

(31/01/2018-Wednesday)

POLITICS:

It's my Mother's birthday today.  She has turned 76.  I spoke to my daughter albeit for a short period, and she was happy. 

And I wish it had remained a happy day. 

Till Heather (early 40's) in her early model Pajero turned into our driveway.  She said that she had phoned a homeless agency in the City and they had given her our address.  As our office is also the current address of the Catalpa Homeless Foundation Ltd.

The World needs to know!

My staff tried a few places including the "Lucy Saw Women's Refuge Centre" in Rockingham, and the only refuge that would take her overnight was a location in Northbridge.  Heather did not have the fuel required in her car to make the trek to Northbridge.  A share facility in Mandurah would put her up for $150.00 a week.  But she is uncertain about this facility.

She is frightened about spending the night at the beach carparks, where the majority of the homeless people in our community end up.

So I have offered Heather the safety of the JPA driveway during the night time hours and to use JPA facilities during daytime hours when staff are in attendance.

Heather was happy with this.

 

 

 

 

JOSEPH PATERNITI​

& ASSOCIATES

 

LET'S TALK: 08 9527 3070

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